Popular iGaming software provider International Game Technology Plc, commonly referred to as IGT, revealed that the Judging Commission has finished analysing the technical and economic provisions in the bid for the Italian lottery license. Lottoitalia, which comprises Allwyn, Novomatic Italia, Arianna 2001, and IGT, had submitted a €2,230 million bid for a lottery license to the Italian gambling regulator ADM. The latter is expected to release formal confirmation within the next 35 days.
Highlights of the Story
- The new lottery licence will allow the IGT-led consortium to operate in the Italian market for the next 9 years.
- Lottoitalia plans to invest €2,230 million up front in instalments by 2026.
- A 6% concession rate will be collected on total wagers, and an extra 8% gross fee will be collected as a distributor’s fee through direct channels.
€2,230M Investment is Worthwhile According to IGT
Lottoitalia proposed to invest €2,230 million upfront as a licensing fee. According to the press release by IGT, the amount is payable in three instalments between now and April 2026. IGT expects the first two instalments of €500 million and €300 million to be paid in 2025. The balance will be settled by the due date in the following year.
Marco Sala, Executive Chair of the Board at IGT, said:
The Italian lottery concession is one of the world’s most prestigious iGaming licences. IGT and its predecessors have had the honour of managing the licence for the past three decades through constant innovation and technological advancements. Being awarded the licence to operate for the next nine years is a rewarding feat. We are honoured and excited to continue working with ADM in the coming decade.
IGT in Charge of Operations
IGT announced that it will control Lottoitalia’s operations while Allwyn will contribute a pro-rata share of the licensing fee and capital investments. Vince Sadusky, CEO at IGT, explained:
The €2,230 million upfront fee reflects the value of the ADM lotto licence. We are confident that this investment will boost our revenue potential. We have several new releases lined up, which will go live once the licence is in place. These new offerings are poised to drive growth in the lottery sector. Additionally, we plan to boost our iLottery sales and use that momentum to carve out a niche in the Italian B2C iCasino, sports betting, and other online gambling markets.
After carefully evaluating the news concerning the IGT-led consortium, analysts at Truist Securities said that the announcement removes potential investor overhangs around IGT losing one of its biggest contracts, representing over a third of its reported EBITDA. Barry Jonas, Managing Director at Truist, noted:
IGT’s contract ends later this year. The company was competing with Flutter for a new 9-year licence. While we think that IGT share prices will be bullish after this announcement, €2.23 billion is a hefty sum. This is substantially larger than the €700 million IGT paid in 2016 and our own projections of €1.3 billion to €1.5 billion.
While the fee is significantly higher than anticipated, Truist explained that the digital gaming part of the new contract could offset the upfront investment and even unlock greater revenue streams than previously recorded.